The U.S. government has taken a dim view of the government's bidding and procurement process, noting that several complaints have been received from U.S. companies over the last year regarding an alleged lack of transparency and "undue government interference" in this process in The Bahamas.
In its latest Investment Climate report on The Bahamas, released June 26, the U.S. State Department appeared to reserve some of its most critical commentary on policies affecting inward U.S. investment into The Bahamas for a section on the transparency of the Bahamian regulatory system.
In this section it called government procurement in this country "particularly problematic", although noting that The Bahamas' regulatory environment "ranks highly when compared with that of other countries in the Western Hemisphere".
Diverging from positions taken in earlier Investment Climate reports, the document states that the U.S. government has received a number of reports of impropriety in recent times surrounding the issuance of contracts by the government.
"Over the last year, the embassy (in Nassau) has received several complaints from U.S. companies alleging a lack of transparency and undue government interference with bidding and procurement processes," states the report, which is compiled for the U.S. State Department by its embassy in Nassau.
In a separate section on corruption, the document also went further than in previous years, stating that "there has not been a sustained effort to ensure that opportunities for abuse of the system are minimized" in this regard.
This criticism came after an oft-repeated observation that there has there has never been a prosecution under the Prevention of Bribery Act in The Bahamas, despite anecdotal evidence suggesting that there is "widespread patronage with contracts routinely directed to party supporters and benefactors".
In a stinging observation on how the government promotes The Bahamas versus the reality of the environment in which international companies find themselves operating, the Investment Climate report states that although The Bahamas government "advertises a market environment where transparency, fair play and equality of treatment are protected under the law" it fails to back this up with legislation governing competition policy, anti trust policy and government procurement.
Echoing concerns raised locally by advocates of greater transparency in government approval processes such as attorney Fred Smith, the report highlights as a key area of concern the "discretionary issuance of approvals and licenses from various government agencies, the National Economic Council and other related authorities."
"In most instances, there is a general lack of transparency with an extremely limited to no possibility for review or appeal of a decision," states the report.
Going into detail on the procurement process, the U.S. report says: "From a practical standpoint, each ministry or governmental agency may employ any method to select a goods or services supplier. The Financial Administration and Audit Act state that a minister can approve any purchase up to $50,000. In the case of purchases equal to or greater than $50,000, but less than $250,000, the Tenders Board, chaired by the financial secretary, will make a recommendation to the Minister of Finance for approval. Amounts exceeding $250,000 must receive Cabinet approval. The process lacks transparency; there is no requirement to engage in open public tenders, and award decisions are not subject to challenge or review."
The report suggested that the government has not been as willing to implement the same high standards governing the use of Bahamian public funds as it has for the use internationally borrowed funds.
In addition to challenges with the procurement process, the report points out the existence of "structural weaknesses" that "undermine the investment environment", such as problems with registering property, trade policy and other "bureaucratic hurdles".
The government has indicated plans to overhaul how it undertakes public procurement, although it is not clear when this will take effect.
In his June 2013 contribution to last year's budget, Minister of State for Finance Michael Halkitis indicated that the government intended to establish within the Ministry of Finance a Public Procurement Department headed by a chief procurement officer appointed by the minister of finance.
The principal function of the department would be to ensure that procurement is done in a fair and equitable manner, adding that independent appeals mechanism- a Public Procurement Review Tribunal - would also be created once the bill is enacted.
Continued statements indicating plans to reform public procurement have emanated from key government officials this year, however no timeline has been given.
In a press release accompanying the report, the U.S. State Department said that it is intended to assist U.S. companies with country-specific information and assessments on investment laws, measures and other important business-related factors in foreign markets.
It added: "The United States encourages foreign governments to embrace open, non-discriminatory, predictable, and transparent investment policies. Foreign investment both in the United States and abroad creates jobs, increases productivity, raises living standards, and gives businesses first-hand knowledge of a wider pool of consumers' preferences. It is a mainstay of our global economy."

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